TSE becomes world's 3rd-largest bourse after absorbing OSE trading

The Tokyo and Osaka stock exchanges integrated the trading of shares at the Tokyo Stock Exchange on Tuesday, making it the world's third-largest exchange by number of listed companies.

Japan Exchange Group Inc., created this year through the merger of the TSE and Osaka Securities Exchange operators, aims to attract more foreign funds by boosting trading efficiency through the integration, at a time it faces fierce international competition.

The number of listed companies on the TSE increased from 2,323 to 3,423, as 1,100 stocks previously traded only on the OSE were transferred to the TSE.

That boosted the Tokyo bourse from seventh to third place in the world in terms of listings, after India's BSE and Canada's TMX Group.

By slashing costs through the merger, the umbrella company, known as JPX for short, plans to bolster promotion of Japanese equities overseas and enhance fast transaction systems to compete against international rivals when U.S. and European bourses are expanding through acquisitions and other Asian exchanges are growing rapidly.

With a trading value of 3.04 trillion U.S. dollars in the first five months of 2013, the TSE already ranked third globally after NYSE Euronext and NASDAQ OMX. But only a small margin separates it from Chinese bourses as the combined trading value at the Shanghai Stock Exchange and the Shenzhen Stock Exchange totaled $2.94 trillion in the same period.

The merger will bring down the costs for companies that used to be listed on both stock exchanges while companies newly transferred from the OSE to the TSE will have more prospects of becoming a component of investment trusts, which are made up of stocks whose main trading platform is the TSE, market analysts say.

In March 2014, JPX will also integrate derivatives trading operations at the OSE and expects to cut about 7 billion yen per year in costs through the whole integration.